The description of AGM Petroleum Ghana Limited as a Ghanaian company by the Ghana National Petroleum Corporation (GNPC) recently has incurred the displeasure of the Africa Centre for Energy Policy (ACEP) which states that it is an attempt to win public support for the AGM-Government deal.

According to the energy think-tank, the GNPC has displayed a lack of understanding of the “Ghanaian company Principle” by referring to such status of incorporation.

“If AGM Ghana is a Ghanaian company by its understanding, then all foreign companies incorporated in Ghana including Tullow Ghana, Kosmos Ghana, are equally Ghanaian companies.”

Responding to a statement issued lately by GNPC on the issue, ACEP noted that the Government of Ghana, “in recognition of the apparent misunderstanding of this principle defined a Ghanaian company in the Petroleum (Local Content and Local Participation) Regulations (LI2204) as the one with a minimum ownership of 51 percent by Ghanaians and with 80 percent of management positions held by Ghanaians.”

It said even though the regulations are before Parliament, the intention of Government behind this policy is clearly stated adding that Parliament, by its standing orders, cannot change the content of the regulations within the 21 days mandatory period.

It continued that such a description of AGM Ghana by GNPC would result in potential revenue losses to the State.

“For tax avoidance purposes, companies register in tax havens and the AGM Gibraltar, owners of AGM Ghana, is no exception.

“The registration of AGM in Gibraltar (a Tax Haven) before Ghana was therefore an attempt to conceal profits and avoid taxes to the state when production commences after discovery of crude oil. Moreover, the complex chain of subsidiaries of the AGM Group creates an octopus (AGM Ghana) whose identity has serious implications for revenue losses to the state. For example, AGM Ghana is owned by AGM Gibraltar while also AGM Gibraltar is owned by AGR, Minexco OGG and MED Songhai Developers. Minexco OGG is owned by WA Natural resources and Minexco Petroleum is also registered in Gibraltar. “So it is difficult to determine who actually owns AGM Ghana, and we must be ready for a complex transaction that will involve substantial financial losses to Ghana through tax planning and transfer pricing.”

ACEP noted also: “We are also concerned that GNPC and Government negotiated 35 percent corporate tax in this contract even though the risk profile on the block in contention (the South Deepwater Tano) is substantially reduced. This is not different from what we gave Tullow Oil and Kosmos when the risks levels were higher with no proven reserves of oil then.”

“We wish to serve notice to GNPC that we will continue to monitor its operations and point out where necessary any good or bad deals it engages in to help protect the interest of our country.

“Gone were the days when GNPC saw itself as an island whose operations could not be scrutinized; but we alert them that we stand ready to expose any deal that could hurt Ghana’s interest.”